Are you renting a furnished and upholstered free sector (‘vrije sector’) rental property in Amsterdam? Then chances are you are paying far too much in service costs.
Tenants of free-sector rental properties often pay excessive service costs for furniture and upholstery. Until the beginning of last year, there was much ambiguity about the service costs that a landlord in The Netherlands may charge the tenant of a free sector rental property. Thanks to a 2020 Supreme Court ruling, this has changed. In this article Mr Mike van Eck will explain what amounts a landlord may charge for furniture and upholstery. I will also discuss a practical example.
This article addresses the following topics:
- What service costs may a landlord charge to the tenant?
- Final settlement of service charges for furniture and upholstery
- Calculation of service costs for furniture and upholstery
- Procedure for free sector rental properties if no final settlement occurs
- Case study: service costs too high
What service charges may a landlord charge the tenant?
The service charges that a landlord passes on to the tenant must be “in relation to” the costs that the landlord incurs to provide these additional services. This means that the landlord may not make profit on the provision of these additional services. The service costs charged by the lessor must be (virtually) equal to the actual costs of these additional services.
A final settlement of the service costs must take place annually. Has the tenant paid too much in service costs? Then the landlord must repay the excess to the tenant. Has the tenant paid too little? Then the tenant must make an additional payment.
Want to know more about service costs in general? Then read the following article:
Annual settlement of service costs for furniture and upholstery
In the annual service cost settlement, a landlord must also determine the “actual” cost of furnishings and service charges. In practice, landlords will regularly disregard these costs. On the one hand because these ‘actual’ costs are not always easy to calculate. On the other hand, because the service costs charged for furniture and upholstery are regularly too high, so that the landlord will have to repay an amount to the tenant.
Calculation of service costs for furniture and upholstery
The actual cost of utilities will usually be fairly easy to calculate. A Dutch landlord will usually receive a final bill from the energy/gas supplier. This will allow the landlord to quickly calculate whether these costs are higher or lower than the service charge.
With furniture and upholstery, it is less easy to calculate the “actual” costs. For this, the lessor must in principle have proof of purchase of the individual goods. After all, this lessor will have to be able to show what the original value of the furniture and upholstery was. Can the landlord show what the purchase value of the individual items was? Then the ‘actual’ cost of the furniture and upholstery can be determined in the following way:
- For the first five years (in some cases ten) after the purchase of the goods, the landlord may pass on 20% of the purchase price to the tenant each year.
- After this five-year period, the landlord must revalue the property. The following rule of thumb is sometimes used: After the first five years, the goods still have 60% of the acquisition value. The lessor may then charge the lessee 20% of the residual value each year.
- After this second five-year period, the lessor will have to revalue the goods again. This may result in the residual value of one or more goods being €0.00.
It is therefore clear from the foregoing that it is not easy for a landlord to calculate the ‘actual’ cost of furniture and upholstery. This may lead the landlord to disregard furniture and upholstery in the final settlement.
Procedure for free sector rental properties if no final settlement occurs
It is common for a Dutch landlord to fail to execute a final bill. Or that the landlord disregards the final bill for furniture and upholstery. In such cases, tenants of free-sector rental properties can initiate proceedings at the court. In such proceedings, a tenant can demand that the landlord provides access to the structure of the service costs and that the landlord repay any excess payment.
Case study: service costs too high
Due to my duty of confidentiality, I will not disclose important details, including the names of parties.
Recently, I assisted a client in a proceeding in Amsterdam in which service costs for furniture and upholstery played an important role. The case involved the following:
- Tenant had been renting a property from the landlord for over ten years.
- This tenant paid several hundred dollars monthly in service costs. A significant portion of these service costs consisted of a fee for furniture and upholstery.
- The landlord had prepared several final bills in recent years. According to the landlord, the tenant would have to pay thousands of additional euros. In this final invoice, this landlord had left out the service costs for furniture and upholstery.
- In addition, significant rent arrears would have accrued.
- The total payment arrears would exceed three months of rent arrears. As a result, this landlord had initiated proceedings to dissolve the rental agreement. In addition, this landlord claimed payment of the (alleged) arrears.
On behalf of the Dutch client, I defended the dissolution and payment of the alleged arrears. On behalf of the client, I took the position that the landlord had not done the annual service cost settlement correctly. Given the age of the furniture and upholstery, the service costs charged were far too high. The judge in Amsterdam decided in my client’s favor. As a result, the landlord had to repay a substantial part of the service costs charged in the previous years. Because there were rent arrears as well, the bottom line was that the client did not have to pay anything to the lessor. Reason why the Amsterdam court rejected the landlord’s claims. In addition, this resulted in the landlord having to reduce the service costs by almost €100.00 per month.
This example shows that a procedure to reduce the service costs can lead to the landlord having to pay back a considerable amount. In some cases, this can lead to a refund of thousands of dollars. In addition, this may result in you receiving a significant reduction in your rent payments in future years as well.
WS Lawyers & Mediators in Amsterdam: experts in the field of service costs
Are you renting a property in the free sector in Amsterdam and paying service charges for furniture and/or upholstery? And does your Dutch landlord refuse to issue a final settlement for the service costs for furniture and upholstery? Then contact one of our Amsterdam lawyers quickly. Our lawyers can advise and assist you in your dispute with your landlord. Depending on the specific circumstances of the case, this may result in your landlord having to pay back hundreds to thousands of euros as well as in your rent (service costs) being significantly reduced in the future.